EXHIBIT 10.2
================================================================================
GUARANTEE AND COLLATERAL AGREEMENT
dated as of
February 24, 2005
among
SELECT MEDICAL HOLDINGS CORPORATION,
SELECT MEDICAL CORPORATION,
THE SUBSIDIARIES OF SELECT MEDICAL CORPORATION
IDENTIFIED HEREIN
and
JPMORGAN CHASE BANK, N.A.
as Collateral Agent
================================================================================
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
Section 1.01. Credit Agreement..................................................................... 1
Section 1.02. Other Defined Terms.................................................................. 1
ARTICLE II
GUARANTEE
Section 2.01. Guarantee ........................................................................... 5
Section 2.02. Guarantee of Payment................................................................. 5
Section 2.03. No Limitations....................................................................... 5
Section 2.04. Reinstatement........................................................................ 6
Section 2.05. Agreement To Pay; Subrogation........................................................ 6
Section 2.06. Information.......................................................................... 7
ARTICLE III
PLEDGE OF SECURITIES
Section 3.01. Pledge .............................................................................. 7
Section 3.02. Delivery of the Pledged Collateral................................................... 8
Section 3.03. Representations, Warranties and Covenants............................................ 8
Section 3.04. Certification of Limited Liability Company and Limited Partnership Interests......... 9
Section 3.05. Registration in Nominee Name; Denominations.......................................... 10
Section 3.06. Voting Rights; Dividends and Interest................................................ 10
ARTICLE IV
SECURITY INTERESTS IN PERSONAL PROPERTY
Section 4.01. Security Interest.................................................................... 12
Section 4.02. Representations and Warranties....................................................... 13
Section 4.03. Covenants............................................................................ 15
Section 4.04. Other Actions........................................................................ 18
Section 4.05. Covenants Regarding Patent, Trademark and Copyright Collateral....................... 19
Section 4.06. Cash Management System, Securities Accounts and Commodity Accounts................... 21
-i-
Page
ARTICLE V
REMEDIES
Section 5.01. Remedies upon Default................................................................ 23
Section 5.02. Application of Proceeds.............................................................. 24
Section 5.03. Grant of License To Use Intellectual Property........................................ 25
Section 5.04. Securities Act....................................................................... 25
ARTICLE VI
INDEMNITY, SUBROGATION AND SUBORDINATION
Section 6.01. Indemnity and Subrogation............................................................ 26
Section 6.02. Contribution and Subrogation......................................................... 26
Section 6.03. Subordination........................................................................ 26
ARTICLE VII
MISCELLANEOUS
Section 7.01. Notices ............................................................................. 27
Section 7.02. Waivers; Amendment................................................................... 27
Section 7.03. Collateral Agent's Fees and Expenses; Indemnification................................ 27
Section 7.04. Successors and Assigns............................................................... 28
Section 7.05. Survival of Agreement................................................................ 28
Section 7.06. Counterparts; Effectiveness; Several Agreement....................................... 28
Section 7.07. Severability......................................................................... 29
Section 7.08. Right of Set-Off..................................................................... 29
Section 7.09. Governing Law; Jurisdiction; Consent to Service of Process........................... 29
Section 7.10. WAIVER OF JURY TRIAL................................................................. 30
Section 7.11. Headings............................................................................. 30
Section 7.12. Security Interest Absolute........................................................... 30
Section 7.13. Termination or Release............................................................... 31
Section 7.14. Additional Subsidiaries; Succeeding Holdings......................................... 31
Section 7.15. Collateral Agent Appointed Attorney-in-Fact.......................................... 32
Section 7.16. Further Assurances................................................................... 32
-ii-
Schedules
- ---------
Schedule I Subsidiary Loan Parties
Schedule II Pledged Stock; Debt Securities
Schedule III Intellectual Property
Schedule IV Commercial Tort Claims
Schedule V Deposit Accounts
Schedule VI Securities Accounts
Exhibits
- --------
Exhibit I Form of Supplement
Exhibit II Form of Deposit Account Control Agreement
Exhibit III Form of Securities Account Control Agreement
-iii-
GUARANTEE AND COLLATERAL AGREEMENT (this "Agreement") dated as of
February 24, 2005, among SELECT MEDICAL HOLDINGS CORPORATION, a Delaware
corporation, SELECT MEDICAL CORPORATION, a Delaware corporation, the
Subsidiaries of SELECT MEDICAL CORPORATION identified herein and JPMORGAN CHASE
BANK, N.A. as Collateral Agent.
Reference is made to the Credit Agreement dated as of February 24,
2005 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among Select Medical Corporation (the "Borrower"), Select
Medical Holdings Corporation, the Lenders party thereto, JPMorgan Chase Bank,
N.A. as Administrative Agent, Wachovia Bank, National Association, as
Syndication Agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated and
CIBC Inc., as Co-Documentation Agents. The Lenders have agreed to extend credit
to the Borrower subject to the terms and conditions set forth in the Credit
Agreement. The obligations of the Lenders to extend such credit are conditioned
upon, among other things, the execution and delivery of this Agreement. Holdings
and the Subsidiary Loan Parties are affiliates of the Borrower, will derive
substantial benefits from the extension of credit to the Borrower pursuant to
the Credit Agreement and are willing to execute and deliver this Agreement in
order to induce the Lenders to extend such credit. Accordingly, the parties
hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. Credit Agreement. (a) Capitalized terms used in this
Agreement and not otherwise defined in this Agreement have the meanings
specified in the Credit Agreement. All terms defined in the New York UCC (as
defined in this Agreement) and not defined in this Agreement have the meanings
specified therein.
(b) The rules of construction specified in Section 1.03 of the
Credit Agreement also apply to this Agreement, mutatis mutandis.
Section 1.02. Other Defined Terms. As used in this Agreement, the
following terms have the meanings specified below:
"Account Debtor" means any Person who is or who may become obligated
to any Grantor under, with respect to or on account of an Account.
"Article 9 Collateral" has the meaning assigned to such term in
Section 4.01.
"Collateral" means Article 9 Collateral and Pledged Collateral.
"Commodity Account Control Agreement" means a control agreement in a
form that is reasonably satisfactory to the Collateral Agent and the
Borrower establishing the Collateral Agent's Control with respect to any
Commodity Account.
"Control" shall mean (i) in the case of each Deposit Account,
"control", as such term is defined in Section 9-104 of the New York UCC,
(ii) in the case of any Securities Account, "control" as such term is
defined in Section 8-106 of the New York UCC, and (iii) in the case of any
Commodity Account, "control", as such term is defined in section 9-106 of
the New York UCC.
"Control Agreements" means, collectively, the Deposit Account
Control Agreements, the Securities Account Control Agreements and the
Commodity Account Control Agreements.
"Copyright License" means any written agreement, now or hereafter in
effect, granting any right to any third party under any copyright now or
hereafter owned by any Grantor or that such Grantor otherwise has the
right to license, or granting any right to any Grantor under any copyright
now or hereafter owned by any third party, and all rights of any Grantor
under any such agreement.
"Copyrights" means all of the following now owned or hereafter
acquired by any Grantor: (a) all copyright rights in any work subject to
the copyright laws of the United States or any other country, whether as
author, assignee, transferee or otherwise and (b) all registrations and
applications for registration of any such copyright in the United States
or any other country, including registrations, recordings, supplemental
registrations and pending applications for registration in the United
States Copyright Office, including those listed on Schedule III.
"Credit Agreement" has the meaning assigned to such term in the
preliminary statement in this Agreement.
"Deposit Account Control Agreement" means an agreement substantially
in the form annexed hereto as Exhibit II or such other form as is
reasonably satisfactory to the Collateral Agent and the Borrower
establishing Collateral Agent's Control with respect to any Deposit
Account.
"Deposit Accounts" means, collectively, with respect to each
Grantor, (i) all "deposit accounts" as such term is defined in the New
York UCC and in any event shall include the LC Account and all accounts
and sub-accounts relating to any of the foregoing accounts and (ii) all
cash, funds, checks, notes and instruments from time to time on deposit in
any of the accounts or sub-accounts described in clause (i) of this
definition.
"Federal Securities Laws" has the meaning assigned to such term in
Section 5.04.
"General Intangibles" means all "General Intangibles" of any Grantor
as defined in Section 9-102(42) of the New York UCC.
"Grantors" means Holdings, the Borrower and the Subsidiary Loan
Parties.
"Guarantors" means Holdings and the Subsidiary Loan Parties.
-2-
"Instrument" has the meaning specified in Article 9 of the New York
UCC.
"Intellectual Property" means all intellectual and similar property
of any Grantor of every kind and nature now owned or hereafter acquired by
any Grantor, including inventions, designs, Patents, Copyrights, Licenses,
Trademarks, trade secrets, confidential or proprietary technical and
business information, know-how or other data or information, software and
databases and all embodiments or fixations thereof and related
documentation, registrations and franchises, and all additions,
improvements and accessions to, and books and records describing or used
in connection with, any of the foregoing.
"Investment Property" means a security, whether certificated or
uncertificated, Security Entitlement, Securities Account, Commodity
Contract or Commodity Account.
"LC Account" means any account established and maintained in
accordance with the provisions of Section 2.05(j) of the Credit Agreement
and all property from time to time on deposit in such LC Account.
"License" means any Patent License, Trademark License, Copyright
License or other license or sublicense agreement to which any Grantor is a
party, including those listed on Schedule III.
"Loan Document Obligations" means (a) the due and punctual payment
by the Borrower of (i) the principal of and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership
or other similar proceeding, regardless of whether allowed or allowable in
such proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, (ii)
each payment required to be made by the Borrower under the Credit
Agreement in respect of any Letter of Credit, when and as due, including
payments in respect of reimbursement of disbursements, interest thereon
(including interest accruing during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding) and obligations to
provide cash collateral, and (iii) all other monetary obligations of the
Borrower to any of the Secured Parties under the Credit Agreement and each
other Loan Document, including obligations to pay fees, expense
reimbursement obligations and indemnification obligations, whether
primary, secondary, direct, contingent, fixed or otherwise (including
monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of
whether allowed or allowable in such proceeding), (b) the due and punctual
performance of all other obligations of the Borrower under or pursuant to
the Credit Agreement and each other Loan Document, and (c) the due and
punctual payment and performance in full of all the obligations of each
other Loan Party under or pursuant to this Agreement and each other Loan
Document.
"New York UCC" means the Uniform Commercial Code as from time to
time in effect in the State of New York.
-3-
"Obligations" means (a) Loan Document Obligations and (b) the due
and punctual payment and performance in full of all obligations of each
Loan Party under each Swap Agreement that (i) is in effect on the
Effective Date with a counterparty that is a Lender or an Affiliate of a
Lender as of the Effective Date or (ii) is entered into after the
Effective Date with any counterparty that is a Lender or an Affiliate of a
Lender at the time such Swap Agreement is entered into.
"Patent License" means any written agreement, now or hereafter in
effect, granting to any third party any right to make, use or sell any
invention on which a patent, now or hereafter owned by any Grantor or that
any Grantor otherwise has the right to license, is in existence, or
granting to any Grantor any right to make, use or sell any invention on
which a patent, now or hereafter owned by any third party, is in
existence, and all rights of any Grantor under any such agreement.
"Patents" means all of the following now owned or hereafter acquired
by any Grantor: (a) all letters patent of the United States or the
equivalent thereof in any other country, all registrations and recordings
thereof, and all applications for letters patent of the United States or
the equivalent thereof in any other country, including registrations,
recordings and pending applications in the United States Patent and
Trademark Office or any similar offices in any other country, including
those listed on Schedule III, and (b) all reissues, continuations,
divisions, continuations-in-part, renewals or extensions thereof, and the
inventions disclosed or claimed therein, including the right to make, use
and/or sell the inventions disclosed or claimed therein.
"Pledged Collateral" has the meaning assigned to such term in
Section 3.01.
"Pledged Debt Securities" has the meaning assigned to such term in
Section 3.01.
"Pledged Securities" means any promissory notes, stock certificates
or other securities now or hereafter included in the Pledged Collateral,
including all certificates, instruments or other documents representing or
evidencing any Pledged Collateral.
"Pledged Stock" has the meaning assigned to such term in Section
3.01.
"Proceeds" has the meaning specified in Section 9-102 of the New
York UCC.
"Secured Parties" means (a) the Lenders, (b) the Collateral Agent,
(c) the Administrative Agent, (d) the Issuing Bank, (e) each counterparty
that is a Lender or an Affiliate of a Lender to any Swap Agreement with a
Loan Party the obligations under which constitute Obligations and (f) the
successors and assigns of each of the foregoing.
"Securities Account Control Agreement" means an agreement
substantially in the form annexed hereto as Exhibit III or an agreement in
a form that is reasonably satisfactory to the Collateral Agent and the
Borrower establishing the Collateral Agent's Control with respect to any
Securities Account.
"Security Interest" has the meaning assigned to such term in Section
4.01.
-4-
"Subsidiary Loan Parties" means (a) the Subsidiaries identified on
Schedule I and (b) each other Subsidiary that becomes a party to this
Agreement as a Subsidiary Loan Party after the Effective Date.
"Trademark License" means any written agreement, now or hereafter in
effect, granting to any third party any right to use any trademark now or
hereafter owned by any Grantor or that any Grantor otherwise has the right
to license, or granting to any Grantor any right to use any trademark now
or hereafter owned by any third party, and all rights of any Grantor under
any such agreement.
"Trademarks" means all of the following now owned or hereafter
acquired by any Grantor: (a) all trademarks, service marks, trade names,
domain names, corporate names, company names, business names, fictitious
business names, trade styles, trade dress, logos, other source or business
identifiers, designs and general intangibles of like nature, now existing
or hereafter adopted or acquired, all registrations and recordings
thereof, and all registration and recording applications filed in
connection therewith, including registrations and registration
applications in the United States Patent and Trademark Office or any
similar offices in any State of the United States or any other country or
any political subdivision thereof, and all extensions or renewals thereof,
including those listed on Schedule III, (b) all goodwill associated
therewith or symbolized thereby and (c) all other assets, rights and
interests that uniquely reflect or embody such goodwill.
ARTICLE II
Guarantee
Section 2.01. Guarantee. Each Guarantor unconditionally guarantees,
jointly with the other Guarantors and severally, as a primary obligor and not
merely as a surety, the due and punctual payment and performance in full of the
Obligations. Each Guarantor further agrees that the Obligations may be extended
or renewed, in whole or in part, or amended or modified, without notice to or
further assent from it, and that it will remain bound upon its guarantee
notwithstanding any extension, renewal, amendment or modification of the
Obligations. Each Guarantor waives presentment to, demand of payment from and
protest to the Borrower or any other Loan Party of the Obligations and also
waives notice of acceptance of its guarantee and notice of protest for
nonpayment.
Section 2.02. Guarantee of Payment. Each Guarantor further agrees
that its guarantee hereunder constitutes a guarantee of payment when due and not
of collection, and waives any right to require that any resort be had by the
Collateral Agent or any other Secured Party to any security held for the payment
of the Obligations or to any balance of any Deposit Account or credit on the
books of the Collateral Agent or any other Secured Party in favor of the
Borrower or any other Person.
Section 2.03. No Limitations. (a) Except for termination of a
Guarantor's obligations hereunder as expressly provided in Section 7.13, the
obligations of each Guarantor hereunder shall not be subject to any reduction,
limitation, impairment or termination for any
-5-
reason, including any claim of waiver, release, surrender, alteration or
compromise, and shall not be subject to any defense or set-off, counterclaim,
recoupment or termination whatsoever by reason of the invalidity, illegality or
unenforceability of the Obligations or otherwise. Without limiting the
generality of the foregoing, the obligations of each Guarantor hereunder shall
not be discharged or impaired or otherwise affected by (i) the failure of the
Collateral Agent or any other Secured Party to assert any claim or demand or to
enforce any right or remedy under the provisions of any Loan Document or
otherwise; (ii) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, any Loan Document or any other
agreement, including with respect to any other Guarantor under this Agreement;
(iii) the release of, impairment of or failure to perfect any Lien held by the
Collateral Agent or any other Secured Party for the payment and performance of
the Obligations or any of them; (iv) any default, failure or delay, wilful or
otherwise, in the performance of the Obligations; or (v) any other act or
omission that may or might in any manner or to any extent vary the risk of any
Guarantor or otherwise operate as a discharge of any Guarantor as a matter of
law or equity (other than the indefeasible payment in full in cash of the
Obligations). Each Guarantor expressly authorizes the Collateral Agent (i) to
take and hold security for the payment and performance of the Obligations, (ii)
to exchange, waive or release any or all such security (with or without
consideration), (iii) to enforce or apply such security and direct the order and
manner of any sale thereof in its sole discretion or (iv) to release or
substitute any one or more other guarantors or obligors upon or in respect of
the Obligations, all without affecting the obligations of any Guarantor
hereunder.
(b) To the fullest extent permitted by applicable law, each
Guarantor waives any defense based on or arising out of any defense of the
Borrower or any other Loan Party or the unenforceability of the Obligations or
any part thereof from any cause, or the cessation from any cause of the
liability of the Borrower or any other Loan Party, other than the indefeasible
payment in full in cash of all the Obligations. The Collateral Agent and the
other Secured Parties may, at their election, foreclose on any security held by
one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust any
part of the Obligations, make any other accommodation with the Borrower or any
other Loan Party or exercise any other right or remedy available to them against
the Borrower or any other Loan Party, without affecting or impairing in any way
the liability of any Guarantor hereunder except to the extent the Obligations
have been fully and indefeasibly paid in full in cash. To the fullest extent
permitted by applicable law, each Guarantor waives any defense arising out of
any such election even though such election operates, pursuant to applicable
law, to impair or to extinguish any right of reimbursement or subrogation or
other right or remedy of such Guarantor against the Borrower or any other Loan
Party, as applicable, or any security.
Section 2.04. Reinstatement. Each of the Guarantors agrees that its
guarantee hereunder shall continue to be effective or be reinstated, as
applicable, if at any time payment, or any part thereof, of any Obligation is
rescinded or must otherwise be restored by the Collateral Agent or any other
Secured Party upon the bankruptcy or reorganization of the Borrower, any other
Loan Party or otherwise.
Section 2.05. Agreement To Pay; Subrogation. In furtherance of the
foregoing and not in limitation of any other right that the Collateral Agent or
any other Secured Party has at
-6-
law or in equity against any Guarantor by virtue hereof, upon the failure of the
Borrower or any other Loan Party to pay any Obligation when and as the same
shall become due, whether at maturity, by acceleration, after notice of
prepayment or otherwise, each Guarantor hereby promises to and will forthwith
pay, or cause to be paid, to the Collateral Agent for distribution to the
applicable Secured Parties in cash the amount of such unpaid Obligation. Upon
payment by any Guarantor of any sums to the Collateral Agent as provided above,
all rights of such Guarantor against the Borrower or any other Loan Party
arising as a result thereof by way of right of subrogation, contribution,
reimbursement, indemnity or otherwise shall in all respects be subject to
Article VI.
Section 2.06. Information. Each Guarantor assumes all responsibility
for being and keeping itself informed of the Borrower's and each other Loan
Party's financial condition and assets and of all other circumstances bearing
upon the risk of nonpayment of the Obligations and the nature, scope and extent
of the risks that such Guarantor assumes and incurs hereunder and agrees that
none of the Collateral Agent or the other Secured Parties will have any duty to
advise such Guarantor of information known to it or any of them regarding such
circumstances or risks.
ARTICLE III
Pledge of Securities
Section 3.01. Pledge. As security for the payment or performance, as
applicable, in full of the Obligations, each Grantor hereby grants to the
Collateral Agent, its successors and assigns, for the ratable benefit of the
Secured Parties, a security interest in, all of such Grantor's right, title and
interest in, to and under (a) the shares of capital stock and other Equity
Interests of the Borrower and each Subsidiary owned by it and listed on Schedule
II and any other Equity Interests of a Subsidiary obtained in the future by such
Grantor and the certificates representing all such Equity Interests (the
"Pledged Stock"), provided that the Pledged Stock shall not include more than
65% of the outstanding voting Equity Interests of any Foreign Subsidiary; (b)(i)
the debt securities listed opposite the name of such Grantor on Schedule II,
(ii) any debt securities issued after the Effective Date to such Grantor by
Holdings, the Borrower and each Subsidiary and (iii) the promissory notes and
any other instruments evidencing such debt securities (the "Pledged Debt
Securities"); (c) all other property that may be delivered to and held by the
Collateral Agent pursuant to the terms of this Section 3.01; (d) subject to
Section 3.06, all payments of principal or interest, dividends, cash,
instruments and other property from time to time received, receivable or
otherwise distributed in respect of, in exchange for or upon the conversion of,
and all other Proceeds received in respect of, the securities referred to in
clauses (a), (b) and (c) above; (e) subject to Section 3.06, all rights and
privileges of such Grantor with respect to the securities and other property
referred to in clauses (a), (b), (c) and (d) above; and (f) all Proceeds of any
of the foregoing (the items referred to in clauses (a) through (f) above being
collectively referred to as the "Pledged Collateral").
TO HAVE AND TO HOLD the Pledged Collateral, together with all right,
title, interest, powers, privileges and preferences pertaining or incidental
thereto, unto the Collateral
-7-
Agent, its successors and assigns, for the ratable benefit of the Secured
Parties, forever, subject, however, to the terms, covenants and conditions
hereinafter set forth.
Section 3.02. Delivery of the Pledged Collateral. (a) Each Grantor
represents and warrants that all certificates, agreements or instruments
representing or evidencing the Pledged Collateral in existence on the date
hereof have been delivered to the Collateral Agent in suitable form for transfer
by delivery or accompanied by duly executed instruments of transfer or
assignment in blank. Each Grantor agrees promptly to deliver or cause to be
delivered to the Collateral Agent any and all Pledged Securities.
(b) Each Grantor will cause any Indebtedness for borrowed money owed
to such Grantor by any Person (other than a Loan Party) which is (A) in excess
of $2,000,000 and (B) evidenced by a duly executed promissory note to be pledged
and delivered to the Collateral Agent pursuant to the terms hereof.
(c) Upon delivery to the Collateral Agent, (i) any Pledged
Securities shall be accompanied by undated stock powers duly executed in blank
or other undated instruments of transfer reasonably satisfactory to the
Collateral Agent and by such other instruments and documents as the Collateral
Agent may reasonably request and (ii) all other property comprising part of the
Pledged Collateral shall be accompanied by proper instruments of assignment duly
executed by the applicable Grantor and such other instruments or documents as
the Collateral Agent may reasonably request. Each delivery of Pledged Securities
shall be accompanied by a schedule describing such Pledged Securities, which
schedule shall be attached hereto as a supplement to Schedule II and made a part
hereof, provided that failure to attach any such schedule hereto shall not
affect the validity of such pledge of such Pledged Securities. Each schedule so
delivered shall supplement any prior schedules so delivered.
Section 3.03. Representations, Warranties and Covenants. The
Grantors jointly and severally represent, warrant and covenant to and with the
Collateral Agent, for the benefit of the Secured Parties, that:
(a) Schedule II correctly sets forth the percentage of the issued
and outstanding shares (or units or other comparable measure) of each class of
the Equity Interests of the issuer thereof represented by the Pledged Stock and
includes all Equity Interests, debt securities and promissory notes required to
be pledged hereunder in order to satisfy the Collateral and Guarantee
Requirement;
(b) the Pledged Stock and Pledged Debt Securities have been duly and
validly authorized and issued by the issuers thereof and (i) in the case of
Pledged Stock, are fully paid and nonassessable and (ii) in the case of Pledged
Debt Securities, are legal, valid and binding obligations of the issuers
thereof;
(c) except for the security interests granted hereunder, each of the
Grantors (i) is and, subject to any transfers made in compliance with the Credit
Agreement, will continue to be the direct owner, beneficially and of record, of
the Pledged Securities indicated on Schedule II as owned by such Grantor, (ii)
holds the same free and clear of all Liens, other than Liens created by any Loan
Document and Liens permitted by Section 6.02 of the Credit
-8-
Agreement, (iii) will make no assignment, pledge, hypothecation or transfer of,
or create or permit to exist any security interest in or other Lien on, the
Pledged Collateral, other than Liens created by any Loan Document, Liens
permitted by Section 6.02 of the Credit Agreement and transfers made in
compliance with the Credit Agreement, and (iv) will defend its title or interest
thereto or therein against any and all Liens (other than Liens created by any
Loan Document and Liens permitted by Section 6.02 of the Credit Agreement),
however arising, of all Persons whomsoever;
(d) except for restrictions and limitations imposed by (i) the Loan
Documents, (ii) securities laws generally or (iii) customary provisions in joint
venture agreements relating to purchase options, rights for first refusal, tag,
drag, call or similar rights of a third party that owns Equity Interests in such
joint venture, the Pledged Collateral is and will continue to be freely
transferable and assignable, and none of the Pledged Collateral is or will be
subject to any option, right of first refusal, shareholders agreement, charter
or by-law provision or contractual restriction of any nature that might
prohibit, impair, delay or otherwise affect the pledge of such Pledged
Collateral hereunder, the sale or disposition thereof pursuant hereto or the
exercise by the Collateral Agent of rights and remedies hereunder;
(e) each of the Grantors has the power and authority to pledge the
Pledged Collateral pledged by it hereunder in the manner hereby done or
contemplated;
(f) no consent or approval of any Governmental Authority, any
securities exchange or any other Person was or is necessary to the validity of
the pledge effected hereby (other than such as have been obtained and are in
full force and effect);
(g) by virtue of the execution and delivery by the Grantors of this
Agreement, when any Pledged Securities are delivered to the Collateral Agent in
accordance with this Agreement, the Collateral Agent will obtain, for the
benefit of the Secured Parties, a legal, valid and perfected lien upon and
security interest in such Pledged Securities as security for the payment and
performance of the Obligations; and
(h) the pledge effected hereby is effective to vest in the
Collateral Agent, for the ratable benefit of the Secured Parties, the rights of
the Collateral Agent in the Pledged Collateral as set forth in this Agreement.
Section 3.04. Certification of Limited Liability Company and Limited
Partnership Interests. (a) Each Grantor acknowledges and agrees that each
interest in any limited liability company or limited partnership controlled by
any Grantor and acquired after the Effective Date and pledged hereunder that is
represented by a certificate, shall be a "security" within the meaning of
Article 8 of the New York UCC and shall be governed by Article 8 of the New York
UCC.
(b) Each Grantor further acknowledges and agrees that (i) the
interests in any limited liability company or limited partnership controlled by
such Grantor and pledged hereunder that are not represented by a certificate are
not "securities" within the meaning of Article 8 of the New York UCC and (ii)
such Grantor shall at no time elect to treat any such interest as a "security"
within the meaning of Article 8 of the New York UCC or issue any
-9-
certificate representing such interest, unless such Grantor provides prompt
written notification to the Collateral Agent of such election and promptly (but
in no case later than 10 Business Days) pledges any such certificate to the
Collateral Agent pursuant to the terms hereof.
Section 3.05. Registration in Nominee Name; Denominations. The
Collateral Agent, on behalf of the Secured Parties, shall have the right (in its
sole and absolute discretion) to hold the Pledged Securities in the name of the
applicable Grantor, endorsed or assigned in blank or in favor of the Collateral
Agent or, upon the occurrence and during the continuation of an Event of
Default, in its own name as pledge or the name of its nominee (as pledge or as
sub-agent). Each Grantor will promptly give to the Collateral Agent copies of
any notices or other communications received by it with respect to Pledged
Securities registered in the name of such Grantor. The Collateral Agent shall at
all times upon the occurrence and during the continuation of an Event of Default
have the right to exchange the certificates representing Pledged Securities for
certificates of smaller or larger denominations for any purpose consistent with
this Agreement.
Section 3.06. Voting Rights; Dividends and Interest. (a) Unless and
until an Event of Default shall have occurred and be continuing and the
Collateral Agent shall have notified the Grantors that their rights under this
Section 3.06 are being suspended:
(i) Each Grantor shall be entitled to exercise any and all voting
and other consensual rights and powers inuring to an owner of Pledged
Securities or any part thereof for any purpose consistent with the terms
in this Agreement, the Credit Agreement and the other Loan Documents,
provided that such rights and powers shall not be exercised in any manner
that would reasonably be expected to materially and adversely affect the
rights inuring to a holder of any Pledged Securities or the rights and
remedies of any of the Collateral Agent or the other Secured Parties under
this Agreement or the Credit Agreement or any other Loan Document or the
ability of the Secured Parties to exercise the same.
(ii) The Collateral Agent shall execute and deliver to each Grantor,
or cause to be executed and delivered to such Grantor, all such proxies,
powers of attorney and other instruments as such Grantor may reasonably
request for the purpose of enabling such Grantor to exercise the voting
and other consensual rights and powers it is entitled to exercise pursuant
to subparagraph (i) above.
(iii) Each Grantor shall be entitled to receive and retain any and
all dividends, interest, principal and other distributions paid on or
distributed in respect of the Pledged Securities to the extent and only to
the extent that such dividends, interest, principal and other
distributions are permitted by, and otherwise paid or distributed in
accordance with, the terms and conditions of the Credit Agreement, the
other Loan Documents and applicable laws, provided that any noncash
dividends, interest, principal or other distributions that would
constitute Pledged Stock or Pledged Debt Securities, whether resulting
from a subdivision, combination or reclassification of the outstanding
Equity Interests of the issuer of any Pledged Securities or received in
exchange for Pledged Securities or any part thereof, or in redemption
thereof, or as a result of any merger, consolidation, acquisition or other
exchange of assets to which such issuer may be a
-10-
party or otherwise, shall be and become part of the Pledged Collateral,
and, if received by any Grantor, shall not be commingled by such Grantor
with any of its other funds or property but shall be held separate and
apart therefrom, shall be held in trust for the benefit of the Collateral
Agent and the other Secured Parties and shall be forthwith delivered to
the Collateral Agent in the same form as so received (with any necessary
endorsement as described in Section 3.03(c) or otherwise).
(b) Upon the occurrence and during the continuation of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(iii) of this Section 3.06, all
rights of any Grantor to dividends, interest, principal or other distributions
that such Grantor is authorized to receive pursuant to paragraph (a)(iii) of
this Section 3.06 shall cease, and all such rights shall thereupon become vested
in the Collateral Agent, which shall have the sole and exclusive right and
authority to receive and retain such dividends, interest, principal or other
distributions. All dividends, interest, principal or other distributions
received by any Grantor contrary to the provisions of this Section 3.06 shall be
held in trust for the benefit of the Collateral Agent and the other Secured
Parties, shall be segregated from other property or funds of such Grantor and
shall be forthwith delivered to the Collateral Agent upon demand in the same
form as so received (with any necessary endorsement). Any and all money and
other property paid over to or received by the Collateral Agent pursuant to the
provisions of this paragraph (b) shall be retained by the Collateral Agent in an
account to be established by the Collateral Agent upon receipt of such money or
other property and shall be applied in accordance with the provisions of Section
5.02. After all Events of Default have been cured or waived and the Borrower has
delivered to the Collateral Agent a certificate to that effect, the Collateral
Agent shall promptly repay to each Grantor (without interest) all dividends,
interest, principal or other distributions that such Grantor would otherwise be
permitted to retain pursuant to the terms of paragraph (a)(iii) of this Section
3.06 and that remain in such account.
(c) Upon the occurrence and during the continuation of an Event of
Default, after the Collateral Agent shall have notified the Grantors of the
suspension of their rights under paragraph (a)(i) of this Section 3.06, all
rights of any Grantor to exercise the voting and other consensual rights and
powers it is entitled to exercise pursuant to paragraph (a)(i) of this Section
3.06, and the obligations of the Collateral Agent under paragraph (a)(ii) of
this Section 3.06, shall cease, and all such rights shall thereupon become
vested in the Collateral Agent, which shall have the sole and exclusive right
and authority to exercise such voting and other consensual rights and powers,
provided that, unless otherwise directed by the Required Lenders, the Collateral
Agent shall have the right from time to time following and during the
continuation of an Event of Default to permit the Grantors to exercise such
rights. After all Events of Default have been cured or waived, the Grantors
shall have the right to exercise the voting and consensual rights and powers
that they would otherwise be entitled to exercise pursuant to the terms of
paragraph (a)(i) above.
(d) Any notice given by the Collateral Agent to the Grantors
suspending their rights under paragraph (a) of this Section 3.06 (i) may be
given by telephone if promptly confirmed in writing, (ii) may be given to one or
more of the Grantors at the same or different times and (iii) may suspend the
rights of the Grantors under paragraph (a)(i) or paragraph (a)(iii) of this
Section 3.06 in part without suspending all such rights (as specified by the
Collateral Agent in its sole and absolute discretion) and without waiving or
otherwise affecting the
-11-
Collateral Agent's rights to give additional notices from time to time
suspending other rights so long as an Event of Default has occurred and is
continuing.
ARTICLE IV
Security Interests in Personal Property
Section 4.01. Security Interest. (a) As security for the payment or
performance, as applicable, in full of the Obligations, each Grantor hereby
grants to the Collateral Agent, its successors and assigns, for the ratable
benefit of the Secured Parties, a security interest (the "Security Interest") in
all right, title or interest in or to any and all of the following assets and
properties now owned or at any time hereafter acquired by such Grantor or in
which such Grantor now has or at any time in the future may acquire any right,
title or interest (collectively, the "Article 9 Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all cash and Deposit Accounts;
(iv) all Documents;
(v) all Equipment;
(vi) all General Intangibles;
(vii) all Instruments;
(viii) all Inventory;
(ix) all Investment Property;
(x) all Letter-of-credit rights;
(xi) the commercial tort claims specified on Schedule IV;
(xii) all books and records pertaining to the Article 9 Collateral;
and
(xiii) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing and all collateral security,
supporting obligations and guarantees given by any Person with respect to
any of the foregoing.
Notwithstanding the foregoing, the Article 9 Collateral shall not include (i)
any Equipment that is subject to a purchase money lien or capital lease
permitted under the Credit Agreement to the extent the documents relating to
such purchase money lien or capital lease would not permit such Equipment to be
subject to the Security Interests created hereby, (ii) any general intangibles
or other rights arising under any joint venture agreements to the extent that
customary provisions in
-12-
such agreements governing or entered into by such joint ventures (other than
with respect to any general intangibles or other rights held by a Grantor in any
Permitted Joint Venture Loan Party) would not permit such general intangibles or
other rights to be subject to the Security Interests created hereby and (iii)
any lease, license or other contract if the grant of a security interest therein
in the manner contemplated by this Security Agreement, under the terms thereof
or under applicable law, is prohibited or would give any other party thereto
(other than a Grantor) the right to terminate such lease, license or other
contract; provided that the exclusions in clauses (ii) and (iii) shall only
apply to the extent that any such prohibition or termination right would not be
rendered ineffective pursuant to the New York UCC or any other applicable law.
(b) Each Grantor hereby irrevocably authorizes the Collateral Agent
at any time and from time to time to file in any relevant jurisdiction any
initial financing statements (including fixture filings) with respect to the
Article 9 Collateral or any part thereof and amendments thereto that (i)
indicate the Collateral as "all assets" of such Grantor or such other
description as the Collateral Agent may determine and (ii) contain the
information required by Article 9 of the Uniform Commercial Code of each
applicable jurisdiction for the filing of any financing statement or amendment,
including (A) whether such Grantor is an organization, the type of organization
and any organizational identification number issued to such Grantor and (B) in
the case of a financing statement filed as a fixture filing or covering Article
9 Collateral constituting minerals or the like to be extracted or timber to be
cut, a sufficient description of the real property to which such Article 9
Collateral relates. Each Grantor agrees to provide such information to the
Collateral Agent promptly upon request.
Each Grantor also ratifies its authorization for the Collateral
Agent to file in any relevant jurisdiction any initial financing statements
(including fixture filings, as applicable) or other appropriate filings,
recordings or registrations or amendments thereto if filed prior to the date
hereof.
The Collateral Agent is further authorized to file with the United
States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) such documents as
may be necessary or advisable for the purpose of perfecting, confirming,
continuing, enforcing or protecting the Security Interest granted by each
Grantor, without the signature of any Grantor, and naming any Grantor or the
Grantors as debtors and the Collateral Agent as secured party.
(c) The Security Interest is granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or in any way alter
or modify, any obligation or liability of any Grantor with respect to or arising
out of the Article 9 Collateral.
Section 4.02. Representations and Warranties. The Grantors jointly
and severally represent and warrant to the Collateral Agent and the other
Secured Parties that:
(a) Each Grantor has good and valid rights in and title to the
Article 9 Collateral and has full power and authority to grant to the Collateral
Agent, for the ratable benefit of the Secured Parties, the Security Interest in
such Article 9 Collateral pursuant hereto and to execute, deliver and perform
its obligations in accordance with the terms in this
-13-
Agreement, without the consent or approval of any other Person other than any
consent or approval that has been obtained.
(b) The Perfection Certificate has been duly prepared, completed and
executed and the information set forth therein, including the exact legal name
of each Grantor, is correct and complete in all material respects as of the
Effective Date. The Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations prepared by the Collateral Agent based upon the information
provided to the Collateral Agent in the Perfection Certificate for filing in
each governmental, municipal or other office specified in Schedule 2 to the
Perfection Certificate (or specified by notice from the Borrower to the
Collateral Agent after the Effective Date in the case of filings, recordings or
registrations required by Section 5.03(a), 5.03(b) or 5.12 of the Credit
Agreement), are all the filings, recordings and registrations (other than
filings required to be made in the United States Patent and Trademark Office and
the United States Copyright Office in order to perfect the Security Interest in
Article 9 Collateral consisting of United States Patents, United States
registered Trademarks (and Trademarks for which United States registration
applications are pending) and United States registered Copyrights) that are
necessary to publish notice of and protect the validity of and to establish a
legal, valid and perfected security interest in favor of the Collateral Agent,
for the ratable benefit of the Secured Parties, in respect of all Article 9
Collateral in which the Security Interest may be perfected by filing, recording
or registration in the United States (or any political subdivision thereof) and
its territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary in any such
jurisdiction, except as provided under applicable law with respect to the filing
of continuation statements. Each Grantor represents and warrants that a fully
executed agreement in the form hereof and containing a description of all
Article 9 Collateral consisting of Intellectual Property with respect to United
States Patents and United States registered Trademarks (and Trademarks for which
United States registration applications are pending) and United States
registered Copyrights have been delivered to the Collateral Agent for recording
by the United States Patent and Trademark Office and the United States Copyright
Office pursuant to 35 U.S.C. Section 261, 15 U.S.C. Section 1060 or 17 U.S.C.
Section 205 and the regulations thereunder, as applicable, and otherwise as may
be required pursuant to the laws of any other necessary jurisdiction, to protect
the validity of and to establish a legal, valid and perfected security interest
in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties, in respect of all Article 9 Collateral consisting of United States
Patents, United States registered Trademarks (and Trademarks for which United
States registration applications are pending) and United States registered
Copyrights in which a security interest may be perfected by filing, recording or
registration in the United States (or any political subdivision thereof) and its
territories and possessions, and no further or subsequent filing, refiling,
recording, rerecording, registration or reregistration is necessary (other than
such actions as are necessary to perfect the Security Interest with respect to
any Article 9 Collateral consisting of United States Patents, United States
registered Trademarks (and Trademarks for which United States registration
applications are pending) and United States registered Copyrights acquired or
developed after the date hereof).
(c) The Security Interest constitutes (i) a legal and valid security
interest in all the Article 9 Collateral securing the payment and performance of
the Obligations, (ii) subject to the filings described in Section 4.02(b), a
perfected security interest in all Article 9 Collateral in which a security
interest may be perfected by filing, recording or registering a financing
-14-
statement or analogous document in the United States (or any political
subdivision thereof) and its territories and possessions pursuant to the Uniform
Commercial Code or other applicable law in such jurisdictions and (iii) a
security interest that shall be perfected in all Article 9 Collateral in which a
security interest may be perfected upon the receipt and recording of this
Agreement with the United States Patent and Trademark Office and the United
States Copyright Office, as applicable, within the three-month period
(commencing as of the date hereof) pursuant to 35 U.S.C. Section 261 or 15
U.S.C. Section 1060 or the one-month period (commencing as of the date hereof)
pursuant to 17 U.S.C. Section 205 and otherwise as may be required pursuant to
the laws of any other necessary jurisdiction. The Security Interest is and shall
be prior to any other Lien on any of the Article 9 Collateral, other than
Permitted Encumbrances and Liens that are permitted by the Credit Agreement and
that have priority as a matter of applicable law.
(d) The Article 9 Collateral is owned by the Grantors free and clear
of any Lien, except for Liens permitted under Section 6.02 of the Credit
Agreement. None of the Grantors has filed or consented to the filing of (i) any
financing statement or analogous document under the Uniform Commercial Code or
any other applicable laws covering any Article 9 Collateral, (ii) any assignment
in which any Grantor assigns any Collateral or any security agreement or similar
instrument covering any Article 9 Collateral with the United States Patent and
Trademark Office or the United States Copyright Office or (iii) any assignment
in which any Grantor assigns any Article 9 Collateral or any security agreement
or similar instrument covering any Article 9 Collateral with any foreign
governmental, municipal or other office, which financing statement or analogous
document, assignment, security agreement or similar instrument is still in
effect, except, in each case, for Liens permitted under Section 6.02 of the
Credit Agreement.
Section 4.03. Covenants. (a) Each Grantor agrees promptly (but in no
case more than 90 days) to notify the Collateral Agent in writing of any change
(i) in its corporate name, (ii) in the location of its chief executive office or
its principal place of business, (iii) in its identity or type of organization
or corporate structure, (iv) in its Federal Taxpayer Identification Number or
organizational identification number or (v) in its jurisdiction of organization.
Each Grantor agrees to promptly provide the Collateral Agent with certified
organizational documents reflecting any of the changes described in the first
sentence of this Section 4.03(a). Each Grantor agrees not to effect or permit
any change referred to in the second preceding sentence unless all filings have
been made under the Uniform Commercial Code or otherwise that are required in
order for the Collateral Agent to continue at all times following such change to
have a valid, legal and perfected first priority security interest (subject to
Liens permitted under Section 6.02 of the Credit Agreement) in the Article 9
Collateral. Each Grantor agrees promptly to notify the Collateral Agent if any
portion of the Article 9 Collateral material to a Grantor's business owned or
held by such Grantor is damaged or destroyed.
(b) Each Grantor agrees to maintain, at its own cost and expense,
such complete and accurate records with respect to the Article 9 Collateral
owned by it as is consistent with its current practices and in accordance with
such standard practices used in industries that are the same as or similar to
those in which such Grantor is engaged, but in any event to include complete
accounting records indicating all payments and proceeds received with respect to
any part of the Article 9 Collateral, and, at such time or times as the
Collateral Agent may reasonably request, promptly to prepare and deliver to the
Collateral Agent a duly certified schedule or
-15-
schedules in form and detail reasonably satisfactory to the Collateral Agent
showing the identity, amount and location of any and all Article 9 Collateral.
(c) Each year, at the time of delivery of annual financial
statements with respect to the preceding fiscal year pursuant to Section 5.01(a)
of the Credit Agreement, the Borrower shall deliver to the Collateral Agent a
certificate executed by a Financial Officer of the Borrower setting forth the
information required pursuant to the Perfection Certificate or confirming that
there has been no material change in such information since the date of the
Perfection Certificate delivered on the Effective Date or the date of the most
recent certificate delivered pursuant to this Section 4.03(c). Each certificate
delivered pursuant to this Section 4.03(c) shall identify in the format of
Schedule III all Intellectual Property of any Grantor in existence on the date
thereof and not then listed on such Schedules or previously so identified to the
Collateral Agent.
(d) Each Grantor shall, at its own expense, take any and all actions
necessary to defend title to the Article 9 Collateral (other than Article 9
Collateral that is deemed by the board of directors of such Grantor to be
immaterial to the conduct of its business) against all Persons and to defend the
Security Interest of the Collateral Agent in the Article 9 Collateral and the
priority thereof against any Lien not expressly permitted pursuant to Section
6.02 of the Credit Agreement. Nothing in this Agreement shall prevent any
Grantor from discontinuing the operation or maintenance of any of its assets or
properties if such discontinuance is (x) in the judgment of its board of
directors, desirable in the conduct of its business and (y) permitted by the
Credit Agreement.
(e) Each Grantor agrees, at its own expense, to execute,
acknowledge, deliver and cause to be duly filed all such further instruments and
documents and take all such actions as the Collateral Agent may from time to
time reasonably request to better assure, preserve, protect and perfect the
Security Interest and the rights and remedies created hereby, including the
payment of any fees and taxes required in connection with the execution and
delivery of this Agreement, the granting of the Security Interest and the filing
of any financing statements (including fixture filings) or other documents
(including execution of agreements in the form of Exhibits IV, V and VI and
filing such agreements with the United States Patent and Trademark Office or
United States Copyright Office, as applicable) in connection herewith or
therewith. If any amount payable to any Grantor under or in connection with any
of the Article 9 Collateral shall be or become evidenced by any promissory note
or other instrument in excess of $2,000,000, such note or instrument shall be
immediately pledged and delivered to the Collateral Agent, duly endorsed in a
manner satisfactory to the Collateral Agent.
(f) The Collateral Agent and such Persons as the Collateral Agent
may reasonably designate shall have the right, at the Grantors' own cost and
expense, to inspect the Article 9 Collateral, all records related thereto (and
to make extracts and copies from such records) and the premises upon which any
of the Article 9 Collateral is located, to discuss the Grantors' affairs with
the officers of the Grantors and their independent accountants and to verify
under reasonable procedures, in accordance with Section 5.09 of the Credit
Agreement, the validity, amount, quality, quantity, value, condition and status
of, or any other matter relating to, the Article 9 Collateral, including, (upon
the occurrence and during the continuation of a Default or with the consent of
the applicable Grantor (not to be unreasonably withheld)) in the case of
-16-
Accounts or other Article 9 Collateral in the possession of any third person, by
contacting Account Debtors or the third person possessing such Article 9
Collateral for the purpose of making such a verification. Subject to Section
9.12 of the Credit Agreement, the Collateral Agent shall have the absolute right
to share any information it gains from such inspection or verification with any
Secured Party.
(g) At its option, the Collateral Agent may discharge past due
Taxes, assessments, charges, fees or Liens at any time levied or placed on the
Article 9 Collateral and not permitted pursuant to Section 6.02 of the Credit
Agreement, and may pay for the maintenance and preservation of the Article 9
Collateral to the extent any Grantor fails to do so as required by the Credit
Agreement or this Agreement, and each Grantor jointly and severally agrees to
reimburse the Collateral Agent on demand for any payment made or any expense
incurred by the Collateral Agent pursuant to the foregoing authorization,
provided that nothing in this paragraph shall be interpreted as excusing any
Grantor from the performance of, or imposing any obligation on the Collateral
Agent or any Secured Party to cure or perform, any covenants or other promises
of any Grantor with respect to Taxes, assessments, charges, fees, Liens and
maintenance as set forth in this Agreement or in the other Loan Documents.
(h) If at any time any Grantor shall take a security interest in any
property of an Account Debtor or any other Person with a value in excess of
$2,000,000 to secure payment and performance of an Account, such Grantor shall
promptly assign such security interest to the Collateral Agent. Such assignment
need not be filed of public record unless necessary to continue the perfected
status of the security interest against creditors of and transferees from the
Account Debtor or other Person granting the security interest.
(i) Each Grantor shall remain liable to observe and perform all the
conditions and material obligations to be observed and performed by it under
each contract, agreement or instrument relating to the Article 9 Collateral, all
in accordance with the terms and conditions thereof, and each Grantor jointly
and severally agrees to indemnify and hold harmless the Collateral Agent and the
other Secured Parties from and against any and all liability for such
performance.
(j) None of the Grantors shall make or permit to be made an
assignment, pledge or hypothecation of the Article 9 Collateral or shall grant
any other Lien in respect of the Article 9 Collateral, except as permitted by
the Credit Agreement. Subject to the immediately following sentence, none of the
Grantors shall make or permit to be made any transfer of the Article 9
Collateral and each Grantor shall remain at all times in possession of the
Article 9 Collateral owned by it, except as permitted by Sections 6.02 and 6.05
of the Credit Agreement. Without limiting the generality of the foregoing, each
Grantor agrees that it shall not permit any Inventory to be in the possession or
control of any warehouseman, agent, bailee, or processor at any time unless (x)
the aggregate fair value of the Inventory in the possession of or subject to the
control of such Person is less than $2,000,000 or (y) such Person shall have
been notified of the Security Interest and shall have acknowledged in writing,
in form and substance reasonably satisfactory to the Collateral Agent, that such
warehouseman, agent, bailee or processor holds the Inventory for the benefit of
the Collateral Agent subject to the Security Interest and shall act upon the
instructions of the Collateral Agent without further consent from the Grantor,
and that
-17-
such warehouseman, agent, bailee or processor further agrees to waive
and release any Lien held by it with respect to such Inventory, whether arising
by operation of law or otherwise.
(k) None of the Grantors will, without the Collateral Agent's prior
written consent, grant any extension of the time of payment of any Accounts
included in the Article 9 Collateral, compromise, compound or settle the same
for less than the full amount thereof, release, wholly or partly, any Person
liable for the payment thereof or allow any credit or discount whatsoever
thereon, other than compromises, compoundings, settlements and collections made
in the ordinary course of business or in accordance with the reasonable business
judgment of such Grantor.
(l) The Grantors, at their own expense, shall maintain or cause to
be maintained insurance covering physical loss or damage to the Inventory and
Equipment in accordance with the requirements set forth in Section 5.07 of the
Credit Agreement. Each Grantor irrevocably makes, constitutes and appoints the
Collateral Agent (and all officers, employees or agents designated by the
Collateral Agent) as such Grantor's true and lawful agent (and attorney-in-fact)
for the purpose, upon the occurrence and during the continuation of an Event of
Default, of making, settling and adjusting claims in respect of Article 9
Collateral under policies of insurance, endorsing the name of such Grantor on
any check, draft, instrument or other item of payment for the proceeds of such
policies of insurance and for making all determinations and decisions with
respect thereto. In the event that any Grantor at any time or times shall fail
to obtain or maintain any of the policies of insurance required under the Credit
Agreement or to pay any premium in whole or part relating thereto, the
Collateral Agent may, without waiving or releasing any obligation or liability
of the Grantors hereunder or any Event of Default, in its sole reasonable
discretion, obtain and maintain such policies of insurance and pay such premium
and take any other actions with respect thereto as the Collateral Agent deems
advisable. All sums disbursed by the Collateral Agent in connection with this
paragraph, including reasonable attorneys' fees, court costs, out-of-pocket
expenses and other charges relating thereto, shall be payable, upon demand, by
the Grantors to the Collateral Agent and shall be additional Obligations secured
hereby.
(m) Each Grantor shall maintain, in form and manner reasonably
satisfactory to the Collateral Agent, records of its Chattel Paper and its
books, records and documents evidencing or pertaining thereto.
Section 4.04. Other Actions. In order to insure the attachment,
perfection and priority of, and the ability of the Collateral Agent to enforce,
the Security Interest, each Grantor agrees, in each case at such Grantor's own
expense, to take the following actions with respect to the following Article 9
Collateral:
(a) Instruments and Tangible Chattel Paper. Each Grantor represents
and warrants that each Instrument and each item of Tangible Chattel Paper with a
value in excess of $2,000,000 in existence on the date hereof has been properly
endorsed, assigned and delivered to the Collateral Agent, accompanied by
instruments of transfer or assignment duly executed in blank. If any Grantor
shall at any time hold or acquire any Instruments or Chattel Paper with a value
in excess of $2,000,000, such Grantor shall forthwith endorse, assign and
deliver the same
-18-
to the Collateral Agent, accompanied by such undated instruments of transfer or
assignment duly executed in blank as the Collateral Agent may from time to time
reasonably request.
(b) Electronic Chattel Paper and Transferable Records. If any
Grantor at any time holds or acquires an interest in any electronic chattel
paper or any "transferable record," as that term is defined in Section 201 of
the Federal Electronic Signatures in Global and National Commerce Act, or in
Section 16 of the Uniform Electronic Transactions Act as in effect in any
relevant jurisdiction, such Grantor shall promptly notify the Collateral Agent
thereof and, at the request of the Collateral Agent, shall take such action as
the Collateral Agent may reasonably request to vest in the Collateral Agent
control under New York UCC Section 9-105 of such electronic chattel paper or
control under Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or, as applicable, Section 16 of the Uniform Electronic
Transactions Act, as in effect in such jurisdiction, of such transferable
record. The Collateral Agent agrees with such Grantor that the Collateral Agent
will arrange, pursuant to procedures reasonably satisfactory to the Collateral
Agent and so long as such procedures will not result in the Collateral Agent's
loss of control, for the Grantor to make alterations to the electronic chattel
paper or transferable record permitted under UCC Section 9-105 or, as
applicable, Section 201 of the Federal Electronic Signatures in Global and
National Commerce Act or Section 16 of the Uniform Electronic Transactions Act
for a party in control to allow without loss of control, unless an Event of
Default has occurred and is continuing or would occur after taking into account
any action by such Grantor with respect to such electronic chattel paper or
transferable record.
(c) Letter-of-Credit Rights. If any Grantor is at any time a
beneficiary under a letter of credit now or hereafter issued in favor of such
Grantor in an amount in excess of $2,000,000, such Grantor shall promptly notify
the Collateral Agent thereof and, at the request and option of the Collateral
Agent, such Grantor shall, pursuant to an agreement in form and substance
reasonably satisfactory to the Collateral Agent, either (i) arrange for the
issuer and any confirmer of such letter of credit to consent to an assignment to
the Collateral Agent of the proceeds of any drawing under such letter of credit
or (ii) arrange for the Collateral Agent to become the transferee beneficiary of
such letter of credit, with the Collateral Agent agreeing, in each case, that
the proceeds of any drawing under such letter of credit are to be paid to the
applicable Grantor unless an Event of Default has occurred or is continuing.
(d) Commercial Tort Claims. If any Grantor shall at any time hold or
acquire a commercial tort claim in an amount reasonably estimated to exceed
$2,000,000, the Grantor shall promptly notify the Collateral Agent thereof in a
writing signed by such Grantor including a summary description of such claim and
grant to the Collateral Agent, for the ratable benefit of the Secured Parties,
in such writing a security interest therein and in the proceeds thereof, all
upon the terms of this Agreement, with such writing to be in form and substance
reasonably satisfactory to the Collateral Agent.
Section 4.05. Covenants Regarding Patent, Trademark and Copyright
Collateral.
(a) Each Grantor agrees that it will not do any act or omit to do
any act (and will exercise commercially reasonable efforts to prevent its
licensees from doing any act or omitting to do any act) whereby any Patent that
is material to the conduct of such Grantor's
-19-
business would become invalidated or dedicated to the public, and agrees that it
shall continue to mark any products covered by a Patent with the relevant patent
number as necessary and sufficient in its reasonable judgment to establish and
preserve its material rights under applicable patent laws.
(b) Each Grantor (either itself or through its licensees or its
sublicensees) will, for each Trademark material to the conduct of such Grantor's
business, (i) maintain such Trademark in full force free from any claim of
abandonment or invalidity for non-use, (ii) use commercially reasonable efforts
to maintain the quality of products and services offered under such Trademark,
(iii) display such Trademark with notice of Federal or foreign registration (or,
if such Trademark is unregistered, display such Trademark with notice as
required for unregistered Trademarks) to the extent necessary and sufficient to
establish and preserve its maximum rights under applicable law and (iv) not
knowingly use or knowingly permit the use of such Trademark in any violation of
any third party rights.
(c) Each Grantor (either itself or through its licensees or
sublicensees) will, for each work covered by a Copyright material to the conduct
of such Grantor's business, continue to publish, reproduce, display, adopt and
distribute the work with appropriate copyright notice as necessary and
sufficient in its reasonable judgment to establish and preserve its material
rights under applicable copyright laws.
(d) Each Grantor shall notify the Collateral Agent promptly if it
knows that any Patent, Trademark or Copyright material to the conduct of its
business could reasonably be expected to become abandoned, lost or dedicated to
the public, or of any materially adverse determination or development (including
the institution of, or any such determination or development in, any proceeding
in the United States Patent and Trademark Office, United States Copyright Office
or any court or similar office of any country) regarding such Grantor's
ownership of any Patent, Trademark or Copyright, its right to register the same,
or its right to keep and maintain the same.
(e) In no event shall any Grantor, either itself or through any
agent, employee, licensee or designee, file an application with respect to any
Patent, Trademark or Copyright with the United States Patent and Trademark
Office, United States Copyright Office or any office or agency in any political
subdivision of the United States or in any other country or any political
subdivision thereof, unless it promptly informs the Collateral Agent and, upon
request of the Collateral Agent, executes and delivers any and all agreements,
instruments, documents and papers as the Collateral Agent may reasonably request
to evidence the Collateral Agent's security interest in such Patent, Trademark
or Copyright, and each Grantor hereby appoints the Collateral Agent as its
attorney-in-fact to execute and file such writings as are reasonably necessary
for the foregoing purposes, all acts of such attorney being hereby ratified and
confirmed; such power, being coupled with an interest, is irrevocable.
(f) Each Grantor will take all reasonably necessary steps that are
consistent with the practice in any proceeding before the United States Patent
and Trademark Office, United States Copyright Office or any office or agency in
any political subdivision of the United States or in any other country or any
political subdivision thereof, to maintain and pursue each registration or
application that is material to the conduct of such Grantor's business relating
to
-20-
the Patents, Trademarks and/or Copyrights (and to obtain the relevant grant or
registration) and to maintain each issued Patent and each registration of the
Trademarks and Copyrights that is material to the conduct of any Grantor's
business, including timely filings of applications for renewal, affidavits of
use, affidavits of incontestability and payment of maintenance fees, and, if
consistent with good business judgment, to initiate opposition, interference and
cancellation proceedings against third parties.
(g) In the event that any Grantor knows that any Article 9
Collateral consisting of a Patent, Trademark or Copyright material to the
conduct of any Grantor's business has been or is about to be infringed,
misappropriated or diluted by a third party, such Grantor promptly shall notify
the Collateral Agent and shall, if consistent with good business judgment,
promptly sue for infringement, misappropriation or dilution and to recover any
and all damages for such infringement, misappropriation or dilution (and take
any actions required by applicable law prior to instituting such suit), and take
such other actions as are appropriate under the circumstances to protect such
Article 9 Collateral. Nothing in this Agreement shall prevent any Grantor from
discontinuing the use or maintenance of any Article 9 Collateral consisting of a
Patent, Trademark or Copyright, or require any Grantor to pursue any claim of
infringement, misappropriation or dilution, if (x) such Grantor so determines in
its good business judgment and (y) it is not prohibited by the Credit Agreement.
(h) Upon and during the continuation of an Event of Default, each
Grantor shall, at the request of the Collateral Agent, use its commercially
reasonable efforts to obtain all requisite consents or approvals by the licensor
of each Copyright License, Patent License or Trademark License to effect the
assignment of all such Grantor's right, title and interest thereunder to the
Collateral Agent or its designee.
Section 4.06. Cash Management System, Securities Accounts and
Commodity Accounts.
(a) Deposit Accounts. As of the date hereof each Grantor has neither
opened nor maintains any Deposit Accounts other than the accounts listed on
Schedule V and (ii) each of the Deposit Accounts that is designated on such
Schedule V as a controlled account is subject to the terms of a Deposit Account
Control Agreement. No Grantor shall hereafter establish and maintain any Deposit
Account unless (1) the applicable Grantor shall have given the Collateral Agent
30 days' prior written notice of its intention to establish such new Deposit
Account with a Bank, (2) such Bank shall be reasonably acceptable to the
Collateral Agent and (3) such Bank and such Grantor shall have duly executed and
delivered to the Collateral Agent a Deposit Account Control Agreement with
respect to such Deposit Account. The Collateral Agent agrees with each Grantor
that the Collateral Agent shall not give any instructions directing the
disposition of funds from time to time credited to any Deposit Account or
withhold any withdrawal rights from such Grantor with respect to funds from time
to time credited to any Deposit Account except upon the occurrence and during
the continuation of an Event of Default. No Grantor shall grant Control of any
Deposit Account to any person other than the Collateral Agent.
(b) Securities Accounts and Commodity Accounts. As of the date
hereof each Grantor has no Securities Accounts or Commodity Accounts other than
those listed in Schedule
-21-
V and the Collateral Agent has a perfected first priority security interest in
such Securities Accounts and Commodity Accounts by Control. No Grantor shall
hereafter establish and maintain any Securities Account or Commodity Account
with any Securities Intermediary or Commodity Intermediary unless (1) the
applicable Grantor shall have given the Collateral Agent 30 days' prior written
notice of its intention to establish such new Securities Account or Commodity
Account with such Securities Intermediary or Commodity Intermediary, (2) such
Securities Intermediary or Commodity Intermediary shall be reasonably acceptable
to the Collateral Agent and (3) such Securities Intermediary or Commodity
Intermediary, as the case may be, and such Grantor shall have duly executed and
delivered a Control Agreement with respect to such Securities Account or
Commodity Account, as the case may be. Each Grantor shall accept any cash and
Investment Property in trust for the benefit of the Collateral Agent and within
one (1) Business Day of actual receipt thereof, deposit any and all cash and
Investment Property (other than any Investment Property pledged pursuant to
Section 3.02 received by it into a Deposit Account or Securities Account subject
to Collateral Agent's Control. The Collateral Agent agrees with each Grantor
that the Collateral Agent shall not give any Entitlement Orders or instructions
or directions to any issuer of uncertificated securities, Securities
Intermediary or Commodity Intermediary, and shall not withhold its consent to
the exercise of any withdrawal or dealing rights by such Grantor, unless an
Event of Default has occurred and is continuing or, after giving effect to any
such investment and withdrawal rights, would occur. No Grantor shall grant
control over any Investment Property to any person other than the Collateral
Agent.
(c) The provisions of this Section 4.06 shall not apply to (x) any
Excluded Accounts or (y) any other Deposit Accounts, Securities Accounts or
Commodities Accounts opened or maintained by the Grantors (such accounts,
"Non-Excluded Accounts") to the extent that the aggregate average available
daily balance over the immediately preceding 12-month period for all such
Non-Excluded Accounts shall not at any time exceed $6,000,000; provided that to
the extent such balance exceeds $6,000,000, the Grantors agree to promptly (but
in no case longer than the greater of (x) 60 days or (y) such longer period as
agreed to by the Collateral Agent in its reasonable judgment) grant Control over
certain Non-Excluded Accounts not covered by Control Agreements, as selected by
the Grantors, such that immediately after implementing Control Agreements, such
balance as recalculated shall not exceed $6,000,000. For purposes of this clause
(c), "Excluded Accounts" includes (A) the LC Account or any Deposit Account for
which the Collateral Agent is the Bank, (B) any Securities Account or
Commodities Account for which the Collateral Agent is the Securities
Intermediary or the Commodity Intermediary, respectively, (C) any Deposit
Account maintained solely for payroll purposes or holding solely restricted cash
in connection with self-insurance programs, (D) Deposit Accounts, Securities
Accounts and Commodities Accounts that are subject to Control Agreements and (E)
during a six-month period following any Permitted Acquisition, any Deposit
Accounts, Securities Accounts and Commodities Accounts acquired by a Grantor in
connection with such Permitted Acquisition.
-22-
ARTICLE V
Remedies
Section 5.01. Remedies upon Default. Upon the occurrence and during
the continuation of an Event of Default, each Grantor agrees to deliver each
item of Collateral to the Collateral Agent on demand, and it is agreed that the
Collateral Agent shall have the right to take any of or all the following
actions at the same or different times: (a) with respect to any Article 9
Collateral consisting of Intellectual Property, on demand, to cause the Security
Interest to become an assignment, transfer and conveyance of any of or all such
Article 9 Collateral by the applicable Grantors to the Collateral Agent, for the
ratable benefit of the Secured Parties, or to license or sublicense, whether
general, special or otherwise, and whether on an exclusive or nonexclusive
basis, any such Article 9 Collateral throughout the world on such terms and
conditions and in such manner as the Collateral Agent shall determine (other
than in violation of any then-existing licensing arrangements to the extent that
waivers cannot be obtained), and (b) with or without legal process and with or
without prior notice or demand for performance, to take possession of the
Article 9 Collateral and without liability for trespass to enter any premises
where the Article 9 Collateral may be located for the purpose of taking
possession of or removing the Article 9 Collateral and, generally, to exercise
any and all rights afforded to a secured party under the Uniform Commercial Code
or other applicable law. Without limiting the generality of the foregoing, each
Grantor agrees that the Collateral Agent shall have the right, subject to the
mandatory requirements of applicable law, to sell or otherwise dispose of all or
any part of the Collateral at a public or private sale or at any broker's board
or on any securities exchange, for cash, upon credit or for future delivery as
the Collateral Agent shall deem appropriate. Each such purchaser at any sale of
Collateral shall hold the property sold absolutely, free from any claim or right
on the part of any Grantor, and each Grantor hereby waives (to the extent
permitted by law) all rights of redemption, stay and appraisal that such Grantor
now has or may at any time in the future have under any rule of law or statute
now existing or hereafter enacted.
The Collateral Agent shall give the applicable Grantors 10 days'
written notice (which each Grantor agrees is reasonable notice within the
meaning of Section 9-611 of the New York UCC or its equivalent in other
jurisdictions) of the Collateral Agent's intention to make any sale of
Collateral. Such notice, in the case of a public sale, shall state the time and
place for such sale and, in the case of a sale at a broker's board or on a
securities exchange, shall state the board or exchange at which such sale is to
be made and the day on which the Collateral, or portion thereof, will first be
offered for sale at such board or exchange. Any such public sale shall be held
at such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix and state in the notice (if any) of such sale.
At any such sale, the Collateral, or portion thereof, to be sold may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may
determine in its sole and absolute discretion. The Collateral Agent shall not be
obligated to make any sale of any Collateral if it shall determine not to do so,
regardless of the fact that notice of sale of such Collateral shall have been
given. The Collateral Agent may, without notice or publication, adjourn any
public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without
further notice, be made at the time and place to which the same was so
-23-
adjourned. In case any sale of all or any part of the Collateral is made on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the sale price is paid by the purchaser or purchasers
thereof, but the Collateral Agent and the other Secured Parties shall not incur
any liability in case any such purchaser or purchasers shall fail to take up and
pay for the Collateral so sold and, in case of any such failure, such Collateral
may be sold again upon like notice. At any public (or, to the extent permitted
by law, private) sale made pursuant to this Agreement, any Secured Party may bid
for or purchase, free (to the extent permitted by law) from any right of
redemption, stay, valuation or appraisal on the part of any Grantor (all said
rights being also hereby waived and released to the extent permitted by law),
the Collateral or any part thereof offered for sale and may make payment on
account thereof by using any claim then due and payable to such Secured Party
from any Grantor as a credit against the purchase price, and such Secured Party
may, upon compliance with the terms of sale, hold, retain and dispose of such
property without further accountability to any Grantor therefor. For purposes
hereof, a written agreement to purchase the Collateral or any portion thereof
shall be treated as a sale thereof; the Collateral Agent shall be free to carry
out such sale pursuant to such agreement and no Grantor shall be entitled to the
return of the Collateral or any portion thereof subject thereto, notwithstanding
the fact that after the Collateral Agent shall have entered into such an
agreement, all Events of Default shall have been remedied and the Obligations
paid in full. As an alternative to exercising the power of sale herein conferred
upon it, the Collateral Agent may proceed by a suit or suits at law or in equity
to foreclose this Agreement and to sell the Collateral or any portion thereof
pursuant to a judgment or decree of a court or courts having competent
jurisdiction or pursuant to a proceeding by a court-appointed receiver. Any sale
pursuant to the provisions of this Section 5.01 shall be deemed to conform to
the commercially reasonable standards as provided in Section 9-610(b) of the New
York UCC or its equivalent in other jurisdictions.
Section 5.02. Application of Proceeds. The Collateral Agent shall
apply the proceeds of any collection or sale of Collateral pursuant to this
Article V, including any Collateral consisting of cash, as follows:
FIRST, to the payment of all costs and expenses incurred by the
Collateral Agent and the Administrative Agent in connection with such
collection or sale or otherwise in connection with this Agreement, any
other Loan Document or any of the Obligations, including all court costs
and the fees and expenses of its agents and legal counsel, the repayment
of all advances made by the Collateral Agent hereunder or under any other
Loan Document on behalf of any Grantor and any other costs or expenses
incurred in connection with the exercise of any right or remedy hereunder
or under any other Loan Document;
SECOND, to the payment in full of the Obligations (the amounts so
applied to be distributed among the Secured Parties pro rata in accordance
with the amounts of the Obligations owed to them on the date of any such
distribution); and
THIRD, to the Grantors, their successors or assigns, or as a court
of competent jurisdiction may otherwise direct.
-24-
The Collateral Agent shall have sole and absolute discretion as to the time of
application of any such proceeds, moneys or balances in accordance with this
Agreement. Upon any sale of Collateral by the Collateral Agent (including
pursuant to a power of sale granted by statute or under a judicial proceeding),
the receipt of the Collateral Agent or of the officer making the sale shall be a
sufficient discharge to the purchaser or purchasers of the Collateral so sold
and such purchaser or purchasers shall not be obligated to see to the
application of any part of the purchase money paid over to the Collateral Agent
or such officer or be answerable in any way for the misapplication thereof.
Section 5.03. Grant of License To Use Intellectual Property. For the
purpose of enabling the Collateral Agent to exercise rights and remedies under
this Agreement at such time as the Collateral Agent shall be lawfully entitled
to exercise such rights and remedies, each Grantor hereby grants to the
Collateral Agent an irrevocable, nonexclusive license (exercisable without
payment of royalty or other compensation to the Grantors) to use, license or
sublicense any of the Article 9 Collateral consisting of Intellectual Property
now owned or hereafter acquired by such Grantor, and wherever the same may be
located, and including in such license reasonable access to all media in which
any of the licensed items may be recorded or stored and to all computer software
and programs used for the compilation or printout thereof. The use of such
license by the Collateral Agent shall be exercised, at the option of the
Collateral Agent, only upon the occurrence and during the continuation of an
Event of Default, provided that any license, sublicense or other transaction
entered into by the Collateral Agent in accordance herewith shall be binding
upon the Grantors notwithstanding any subsequent cure of an Event of Default.
Section 5.04. Securities Act. In view of the position of the
Grantors in relation to the Pledged Collateral, or because of other current or
future circumstances, a question may arise under the Securities Act of 1933, as
now or hereafter in effect, or any similar statute hereafter enacted analogous
in purpose or effect (such Act and any such similar statute as from time to time
in effect being called the "Federal Securities Laws") with respect to any
disposition of the Pledged Collateral permitted hereunder. Each Grantor
understands that compliance with the Federal Securities Laws might very strictly
limit the course of conduct of the Collateral Agent if the Collateral Agent were
to attempt to dispose of all or any part of the Pledged Collateral, and might
also limit the extent to which or the manner in which any subsequent transferee
of any Pledged Collateral could dispose of the same. Similarly, there may be
other legal restrictions or limitations affecting the Collateral Agent in any
attempt to dispose of all or part of the Pledged Collateral under applicable
Blue Sky or other state securities laws or similar laws analogous in purpose or
effect. Each Grantor recognizes that in light of such restrictions and
limitations the Collateral Agent may, with respect to any sale of the Pledged
Collateral, limit the purchasers to those who will agree, among other things, to
acquire such Pledged Collateral for their own account, for investment, and not
with a view to the distribution or resale thereof. Each Grantor acknowledges and
agrees that in light of such restrictions and limitations, the Collateral Agent,
in its sole and absolute discretion (a) may proceed to make such a sale whether
or not a registration statement for the purpose of registering such Pledged
Collateral or part thereof shall have been filed under the Federal Securities
Laws and (b) may approach and negotiate with a single potential purchaser to
effect such sale. Each Grantor acknowledges and agrees that any such sale might
result in prices and other terms less favorable to the seller than if such sale
were a public sale without such restrictions. In the event of any such sale, the
-25-
Collateral Agent shall incur no responsibility or liability for selling all or
any part of the Pledged Collateral at a price that the Collateral Agent, in its
sole and absolute discretion, may in good faith deem reasonable under the
circumstances, notwithstanding the possibility that a substantially higher price
might have been realized if the sale were deferred until after registration as
aforesaid or if more than a single purchaser were approached. The provisions of
this Section 5.04 will apply notwithstanding the existence of a public or
private market upon which the quotations or sales prices may exceed
substantially the price at which the Collateral Agent sells.
ARTICLE VI
Indemnity, Subrogation and Subordination
Section 6.01. Indemnity and Subrogation. In addition to all such
rights of indemnity and subrogation as the Guarantors may have under applicable
law (but subject to Section 6.03), the Borrower agrees that (a) in the event a
payment of any Obligation shall be made by any Guarantor under this Agreement,
the Borrower shall indemnify such Guarantor for the full amount of such payment
and such Guarantor shall be subrogated to the rights of the Person to whom such
payment shall have been made to the extent of such payment and (b) in the event
any assets of any Grantor shall be sold pursuant to this Agreement or any other
Security Document to satisfy in whole or in part any Obligation owed to any
Secured Party, the Borrower shall indemnify such Grantor in an amount equal to
the fair value of the assets so sold.
Section 6.02. Contribution and Subrogation. Each Guarantor and
Grantor (a "Contributing Party") agrees (subject to Section 6.03) that, in the
event a payment shall be made by any other Guarantor hereunder in respect of any
Obligation or assets of any other Grantor shall be sold pursuant to any Security
Document to satisfy any Obligation owed to any Secured Party and such other
Guarantor or Grantor (the "Claiming Party") shall not have been fully
indemnified by the Borrower as provided in Section 6.01, the Contributing Party
shall indemnify the Claiming Party in an amount equal to the amount of such
payment or the greater of the book value or the fair value of such assets, as
applicable, in each case multiplied by a fraction of which the numerator shall
be the net worth of the Contributing Party on the date hereof and the
denominator shall be the aggregate net worth of all the Guarantors and Grantors
on the date hereof (or, in the case of any Guarantor or Grantor becoming a party
hereto pursuant to Section 7.14, the date of the supplement hereto executed and
delivered by such Guarantor or Grantor). Any Contributing Party making any
payment to a Claiming Party pursuant to this Section 6.02 shall be subrogated to
the rights of such Claiming Party under Section 6.01 to the extent of such
payment.
Section 6.03. Subordination. Notwithstanding any provision in this
Agreement to the contrary, all rights of the Guarantors and Grantors under
Sections 6.01 and 6.02 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to the
indefeasible payment in full in cash of the Obligations. No failure on the part
of the Borrower or any Guarantor or Grantor to make the payments required by
Sections 6.01 and 6.02 (or any other payments required under applicable law or
otherwise) shall in any respect limit the obligations and liabilities of any
Guarantor or Grantor with respect to its
-26-
Obligations hereunder, and each Guarantor and Grantor shall remain liable for
the full amount of the Obligations of such Guarantor or Grantor hereunder.
ARTICLE VII
Miscellaneous
Section 7.01. Notices. All communications and notices hereunder
shall (except as otherwise expressly permitted in this Agreement) be in writing
and given as provided in Section 9.01 of the Credit Agreement, provided that any
communication or notice hereunder from the Collateral Agent to any Loan Party
upon the occurrence and during the continuation of an Event of Default may be
given by telephone if promptly confirmed in writing. All communications and
notices hereunder to any Subsidiary Loan Party shall be given to it in care of
the Borrower as provided in Section 9.01 of the Credit Agreement.
Section 7.02. Waivers; Amendment. (a) No failure or delay by any
Secured Party in exercising any right or power hereunder or under any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such right or power, or any abandonment or discontinuance of
steps to enforce such a right or power, preclude any other or further exercise
thereof or the exercise of any other right or power. The rights and remedies of
the Secured Parties hereunder and under the other Loan Documents are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision in this Agreement or consent to any departure by any
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section 7.02, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan or
issuance of a Letter of Credit shall not be construed as a waiver of any
Default, regardless of whether any Secured Party may have had notice or
knowledge of such Default at the time. No notice or demand on any Loan Party in
any case shall entitle any Loan Party to any other or further notice or demand
in similar or other circumstances.
(b) Neither this Agreement nor any provision hereof may be waived,
amended or modified except pursuant to an agreement or agreements in writing
entered into by the Collateral Agent and the Loan Party or Loan Parties with
respect to which such waiver, amendment or modification is to apply, subject to
any consent required in accordance with Section 9.02 of the Credit Agreement.
Section 7.03. Collateral Agent's Fees and Expenses; Indemnification.
(a) The parties hereto agree that the Collateral Agent shall be entitled to
reimbursement of its reasonable out-of-pocket expenses incurred hereunder as
provided in Section 9.03 of the Credit Agreement.
(b) Without limitation of its indemnification obligations under the
other Loan Documents, each Grantor and each Guarantor jointly and severally
agrees to indemnify the Collateral Agent and the other Indemnitees (as defined
in Section 9.03 of the Credit Agreement) against, and hold each Indemnitee
harmless from, any and all losses, claims, damages, liabilities and related
out-of-pocket expenses, including the fees, charges and disbursements of any
counsel
-27-
for any Indemnitee, incurred by or asserted against any Indemnitee arising out
of, in connection with, or as a result of, the execution, delivery or
performance of this Agreement or any actual or prospective claim, litigation,
investigation or proceeding relating to any of the foregoing agreements or
instruments contemplated hereby, or to the Collateral, whether or not any
Indemnitee is a party thereto, provided that such indemnity shall not, as to any
Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related out-of-pocket expenses are determined by a court of
competent jurisdiction to have resulted from the gross negligence or wilful
misconduct of such Indemnitee or any of its Related Parties.
(c) Any such amounts payable as provided hereunder shall be
additional Obligations secured hereby and by the other Security Documents. The
provisions of this Section 7.03 shall remain operative and in full force and
effect regardless of the termination of this Agreement or any other Loan
Document, the consummation of the transactions contemplated hereby, the
repayment of any of the Obligations, the invalidity or unenforceability of any
term or provision of this Agreement or any other Loan Document, or any
investigation made by or on behalf of the Collateral Agent or any other Secured
Party. All amounts due under this Section 7.03 shall be payable on written
demand therefor.
Section 7.04. Successors and Assigns. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to include
the permitted successors and assigns of such party; and all covenants, promises
and agreements by or on behalf of any Guarantor, Grantor or the Collateral Agent
that are contained in this Agreement shall bind and inure to the benefit of
their respective successors and assigns and shall inure to the benefit of the
other Secured Parties and their respective successors and assigns.
Section 7.05. Survival of Agreement. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Lenders and shall survive the
execution and delivery of the Loan Documents and the making of any Loans and
issuance of any Letters of Credit, regardless of any investigation made by any
Lender or on its behalf and notwithstanding that the Administrative Agent, the
Collateral Agent, the Issuing Bank or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended under the Credit Agreement, and shall continue in full force
and effect as long as the principal of or any accrued interest on any Loan or
any fee or any other amount payable under any Loan Document is outstanding and
unpaid or any Letter of Credit is outstanding and so long as the Commitments
have not expired or terminated.
Section 7.06. Counterparts; Effectiveness; Several Agreement. This
Agreement may be executed in counterparts, each of which shall constitute an
original but all of which, when taken together, shall constitute single
contract. Delivery of an executed signature page to this Agreement by facsimile
transmission shall be as effective as delivery of a manually signed counterpart
of this Agreement. This Agreement shall become effective as to any Loan Party
when a counterpart hereof executed on behalf of such Loan Party shall have been
delivered to the Collateral Agent and a counterpart hereof shall have been
executed on behalf of the Collateral Agent, and thereafter shall be binding upon
such Loan Party and the Collateral Agent and their
-28-
respective permitted successors and assigns, and shall inure to the benefit of
such Loan Party, the Administrative Agent, the Collateral Agent and the other
Secured Parties and their respective successors and assigns, except that no Loan
Party shall have the right to assign or transfer its rights or obligations
hereunder or any interest in this Agreement or in the Collateral (and any such
assignment or transfer shall be void) except as contemplated by this Agreement
or the Credit Agreement. This Agreement shall be construed as a separate
agreement with respect to each Loan Party and may be amended, modified,
supplemented, waived or released with respect to any Loan Party without the
approval of any other Loan Party and without affecting the obligations of any
other Loan Party hereunder.
Section 7.07. Severability. Any provision in this Agreement held to
be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; the invalidity of a particular provision in a
particular jurisdiction shall not invalidate such provision in any other
jurisdiction. The parties shall endeavor in good-faith negotiations to replace
the invalid, illegal or unenforceable provisions with valid provisions the
economic effect of which comes as close as possible to that of the invalid,
illegal or unenforceable provisions.
Section 7.08. Right of Set-Off. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of any
Loan Party against any of and all the obligations of such Loan Party now or
hereafter existing under this Agreement owed to such Lender, irrespective of
whether or not such Lender shall have made any demand under this Agreement and
although such obligations may be unmatured. The applicable Lender shall notify
the Borrower, the Collateral Agent and the Administrative Agent of such set-off
or application, provided that any failure to give or any delay in giving such
notice shall not affect the validity of any such set-off or application under
this Section 7.08. The rights of each Lender under this Section 7.08 are in
addition to other rights and remedies (including other rights of set-off) which
such Lender may have.
Section 7.09. Governing Law; Jurisdiction; Consent to Service of
Process. (a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of the parties hereto hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to this Agreement or any other Loan Document, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State or,
to the extent permitted by law, in such Federal court. Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other
-29-
manner provided by law. Nothing in this Agreement or any other Loan Document
shall affect any right that the Collateral Agent, the Issuing Bank, any Lender
or any Loan Party may otherwise have to bring any action or proceeding relating
to this Agreement or any other Loan Document in the courts of any jurisdiction.
(c) Each of the Loan Parties hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection that it may now or hereafter have to the laying of venue of any suit,
action or proceeding arising out of or relating to this Agreement or any other
Loan Document in any court referred to in paragraph (b) of this Section 7.09.
Each of the parties hereto hereby irrevocably waives, to the fullest extent
permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 7.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
Section 7.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 7.10.
Section 7.11. Headings. Article and Section headings and the Table
of Contents used in this Agreement are for convenience of reference only, are
not part of this Agreement and are not to affect the construction of, or to be
taken into consideration in interpreting, this Agreement.
Section 7.12. Security Interest Absolute. All rights of the
Collateral Agent hereunder, the Security Interest, the grant of a security
interest in the Pledged Collateral and all obligations of each Grantor and
Guarantor hereunder shall be absolute and unconditional irrespective of (a) any
lack of validity or enforceability of the Credit Agreement, any other Loan
Document, any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the
time, manner or place of payment of, or in any other term of, all or any of the
Obligations, or any other amendment or waiver of or any consent to any departure
from the Credit Agreement, any other Loan Document or any other agreement or
instrument, (c) any exchange, release or non-perfection of any Lien on other
collateral, or any release or amendment or waiver of or consent under or
departure from
-30-
any guarantee, securing or guaranteeing all or any of the Obligations, or (d)
any other circumstance that might otherwise constitute a defense available to,
or a discharge of, any Grantor or Guarantor in respect of the Obligations or
this Agreement.
Section 7.13. Termination or Release. (a) This Agreement and the
Guarantees made in this Agreement shall terminate and the Security Interest and
all other security interests granted hereby shall be automatically released when
all the Loan Document Obligations have been indefeasibly paid in full and the
Lenders have no further commitment to lend under the Credit Agreement, the LC
Exposure has been reduced to zero and the Issuing Bank has no further
obligations to issue Letters of Credit under the Credit Agreement.
(b) A Person which was a Loan Party immediately prior to the
consummation of any transaction permitted by the Credit Agreement shall
automatically be released from its obligations hereunder and the Security
Interest in the Collateral of such Person shall be automatically released upon
the consummation of any transaction permitted by the Credit Agreement as a
result of which such Person ceases to be a Loan Party.
(c) Upon any sale or other transfer by any Grantor of any Collateral
that is permitted under the Credit Agreement, or upon the effectiveness of any
written consent to the release of the security interest granted hereby in any
Collateral pursuant to Section 9.02 of the Credit Agreement, the security
interest in such Collateral shall be automatically released.
(d) In connection with any termination or release pursuant to
paragraph (a), (b) or (c) of this Section 7.13, the Collateral Agent shall
execute and deliver to any Person, at such Person's expense, all documents that
such Person shall reasonably request to evidence such termination or release of
its obligations or the Security Interests in its Collateral. Any execution and
delivery of documents pursuant to this Section 7.13 shall be without recourse to
or warranty by the Collateral Agent.
Section 7.14. Additional Subsidiaries; Succeeding Holdings.
(a) Pursuant to Section 5.12 of the Credit Agreement, each
Subsidiary of a Loan Party (other than a Consolidated Practice) that was not in
existence or not a Subsidiary on the date of the Credit Agreement and is not (x)
an Inactive Subsidiary (other than an Inactive Subsidiary that has satisfied the
Collateral and Guarantee Requirement) or (y) a Permitted Joint Venture (other
than a Permitted Joint Venture Loan Party), is required to enter in this
Agreement as a Subsidiary Loan Party upon becoming such a Subsidiary. Upon
execution and delivery by the Collateral Agent and a Subsidiary of an instrument
in the form of Exhibit I hereto, such Subsidiary shall become a Subsidiary Loan
Party hereunder with the same force and effect as if originally named as a
Subsidiary Loan Party in this Agreement. The execution and delivery of any such
instrument shall not require the consent of any other Loan Party hereunder. The
rights and obligations of each Loan Party hereunder shall remain in full force
and effect notwithstanding the addition of any new Loan Party as a party to this
Agreement.
(b) Upon the addition of a Succeeding Holdings, the Succeeding
Holdings is required to enter into this Agreement as a Loan Party. Upon
execution and delivery by the Collateral Agent and a Succeeding Holdings of an
instrument in the form of Exhibit I hereto, such
-31-
Succeeding Holdings shall become a Loan Party hereunder with the same force and
effect as if originally named as a Loan Party in this Agreement. The execution
and delivery of any such instrument shall not require the consent of any other
Loan Party hereunder. The rights and obligations of each Loan Party hereunder
shall remain in full force and effect notwithstanding the addition of any new
Loan Party as a party to this Agreement.
Section 7.15. Collateral Agent Appointed Attorney-in-Fact. Each
Grantor hereby appoints the Collateral Agent the attorney-in-fact of such
Grantor for the purpose of carrying out the provisions of this Agreement and
taking any action and executing any instrument that the Collateral Agent may
deem necessary or advisable to accomplish the purposes hereof, which appointment
is irrevocable and coupled with an interest. Without limiting the generality of
the foregoing, the Collateral Agent shall have the right, upon the occurrence
and during the continuation of an Event of Default, with full power of
substitution either in the Collateral Agent's name or in the name of such
Grantor (a) to receive, endorse, assign and/or deliver any and all notes,
acceptances, checks, drafts, money orders or other evidences of payment relating
to the Collateral or any part thereof; (b) to demand, collect, receive payment
of, give receipt for and give discharges and releases of all or any of the
Collateral; (c) to sign the name of any Grantor on any invoice or bill of lading
relating to any of the Collateral; (d) to send verifications of Accounts
Receivable to any Account Debtor; (e) to commence and prosecute any and all
suits, actions or proceedings at law or in equity in any court of competent
jurisdiction to collect or otherwise realize on all or any of the Collateral or
to enforce any rights in respect of any Collateral; (f) to settle, compromise,
compound, adjust or defend any actions, suits or proceedings relating to all or
any of the Collateral; (g) to notify, or to require any Grantor to notify,
Account Debtors to make payment directly to the Collateral Agent; and (h) to
use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and
things necessary to carry out the purposes of this Agreement, as fully and
completely as though the Collateral Agent were the absolute owner of the
Collateral for all purposes, provided that nothing in this Agreement contained
shall be construed as requiring or obligating the Collateral Agent to make any
commitment or to make any inquiry as to the nature or sufficiency of any payment
received by the Collateral Agent, or to present or file any claim or notice, or
to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby.
The Collateral Agent and the other Secured Parties shall be accountable only for
amounts actually received as a result of the exercise of the powers granted to
them in this Agreement, and neither they nor their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or wilful misconduct.
Section 7.16. Further Assurances. Notwithstanding anything to the
contrary herein, the parties hereto agree to comply with the requirements set
forth in Section 5.13 of the Credit Agreement.
[Signature Pages to Follow]
-32-
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
SELECT MEDICAL HOLDINGS CORPORATION
/s/ Martin F. Jackson
By:_______________________________
Name: Martin F. Jackson
Title: Chief Financial Officer
SELECT MEDICAL CORPORATION,
/s/ Martin F. Jackson
By:_______________________________
Name: Martin F. Jackson
Title: Chief Financial Officer
EACH OF THE SUBSIDIARIES
LISTED ON SCHEDULE I HERETO
/s/ Michael E. Tarvin
By:_______________________________
Name: Michael E. Tarvin
Title: Senior Vice President,
General Counsel and
Secretary
JPMORGAN CHASE BANK, N.A., AS
COLLATERAL AGENT
/s/ Bruce Borden
By:_______________________________
Name: Bruce Borden
Title: Vice President
-33-
Exhibit I to the
Guarantee and
Collateral Agreement
SUPPLEMENT NO. ____ dated as of [ ], to the Guarantee and Collateral
Agreement dated as of February 24, 2005, among SELECT MEDICAL CORPORATION, a
Delaware corporation (the "Borrower"),SELECT MEDICAL HOLDINGS CORPORATION, a
Delaware corporation, each subsidiary of the Borrower listed on Schedule I
thereto (each such subsidiary individually a "Subsidiary Guarantor" and
collectively, the "Subsidiary Guarantors"; the Subsidiary Guarantors, Holdings
and the Borrower are referred to collectively herein as the "Grantors") and
JPMORGAN CHASE BANK, N.A., a New York banking corporation ("JPMCB"), as
Collateral Agent (in such capacity, the "Collateral Agent").
A. Reference is made to the Credit Agreement dated as of February
24, 2005 (as amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"), among the Borrower, Holdings, the lenders from time to time
party thereto, JPMCB, as Administrative Agent, Wachovia Bank, National
Association, as Syndication Agent, and Merrill Lynch, Pierce, Fenner & Smith
Incorporated and CIBC Inc., as Co-Documentation Agents.
B. Capitalized terms used in this Agreement and not otherwise
defined in this Agreement shall have the meanings assigned to such terms in the
Credit Agreement and the Collateral Agreement referred to therein.
C. The Grantors have entered into the Collateral Agreement in order
to induce the Lenders to make Loans and the Issuing Bank to issue Letters of
Credit. Section 7.14 of the Collateral Agreement provides that additional
[Subsidiaries][Succeeding Holdings] of the Borrower may become [Subsidiary] Loan
Parties under the Collateral Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned
[Subsidiary][Succeeding Holdings] (the "[New Subsidiary][Succeeding Holdings")
is executing this Supplement in accordance with the requirements of the Credit
Agreement to become a [Subsidiary] Loan Party under the Collateral Agreement in
order to induce the Lenders to make additional Loans and the Issuing Bank to
issue additional Letters of Credit and as consideration for Loans previously
made and Letters of Credit previously issued.
Accordingly, the Collateral Agent and the [New
Subsidiary][Succeeding Holdings] agree as follows:
SECTION 1. In accordance with Section 7.14 of the Collateral
Agreement, the [New Subsidiary][Succeeding Holdings] by its signature below
becomes a [Subsidiary] Loan Party, a Grantor and a Guarantor under the
Collateral Agreement with the same force and effect as if originally named
therein as a [Subsidiary] Loan Party and the [New Subsidiary][Succeeding
Holdings] hereby (a) agrees to all the terms and provisions of the Collateral
Agreement applicable to it as a [Subsidiary] Loan Party, Grantor and Guarantor
thereunder and (b) represents and warrants that the representations and
warranties made by it as a Grantor and Guarantor thereunder are true and correct
on and as of the date hereof. In furtherance of the
Exh. I-1
foregoing, the [New Subsidiary][Succeeding Holdings], as security for the
payment and performance in full of the Obligations (as defined in the Collateral
Agreement), does hereby create and grant to the Collateral Agent, its successors
and assigns, for the ratable benefit of the Secured Parties, their successors
and assigns, a security interest in and lien on all the [New
Subsidiary's][Succeeding Holdings'] right, title and interest in and to the
Collateral (as defined in the Collateral Agreement) of the New Subsidiary. Each
reference to a "Guarantor" or "Grantor" in the Collateral Agreement shall be
deemed to include the [New Subsidiary][Succeeding Holdings]. The Collateral
Agreement is hereby incorporated in this Agreement by reference.
SECTION 2. The [New Subsidiary][Succeeding Holdings] represents and
warrants to the Collateral Agent and the other Secured Parties that this
Supplement has been duly authorized, executed and delivered by it and
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms.
SECTION 3. This Supplement may be executed in counterparts, each of
which shall constitute an original, but all of which when taken together shall
constitute a single contract. This Supplement shall become effective when the
Collateral Agent shall have received a counterpart of this Supplement that bears
the signature of the [New Subsidiary][Succeeding Holdings] and the Collateral
Agent has executed a counterpart hereof. Delivery of an executed signature page
to this Supplement by facsimile transmission shall be as effective as delivery
of a manually signed counterpart of this Supplement.
SECTION 4. The [New Subsidiary][Succeeding Holdings] hereby
represents and warrants that set forth under its signature hereto is (i) the
true and correct legal name of the [New Subsidiary][Succeeding Holdings], (ii)
its jurisdiction of formation, (iii) its Federal Taxpayer Identification Number
or its organizational identification number and (iv) the location of its chief
executive office.
SECTION 5. Except as expressly supplemented hereby, the Collateral
Agreement shall remain in full force and effect.
SECTION 6. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 7. Any provision of this Supplement held to be invalid,
illegal or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity, illegality or unenforceability
without affecting the validity, legality and enforceability of the remaining
provisions hereof and in the Collateral Agreement; the invalidity of a
particular provision in a particular jurisdiction shall not invalidate such
provision in any other jurisdiction. The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 8. All communications and notices hereunder shall be in
writing and given as provided in Section 7.01 of the Collateral Agreement.
Exh. I-2
SECTION 9. The [New Subsidiary][Succeeding Holdings] agrees to
reimburse the Collateral Agent for its reasonable out-of-pocket expenses in
connection with this Supplement, including the reasonable fees, other charges
and disbursements of counsel for the Collateral Agent.
IN WITNESS WHEREOF, the [New Subsidiary][Succeeding Holdings] and
the Collateral Agent have duly executed this Supplement to the Collateral
Agreement as of the day and year first above written.
[NAME OF [NEW SUBSIDIARY][SUCCEEDING
HOLDINGS]],
By: ________________________________
Name:
Title:
Legal Name:
Jurisdiction of Formation:
Location of Chief Executive Office:
JPMORGAN CHASE BANK, N.A.,
AS COLLATERAL AGENT,
By: ________________________________
Name:
Title:
Exh. I-3
Schedule I
to the Supplement No. __
to the Guarantee and
Collateral Agreement
LOCATION OF COLLATERAL
Description Location
- ----------- --------
EQUITY INTERESTS
Number and
Number of Registered Class of Percentage of
Issuer Certificate Owner Equity Interests Equity Interests
- ------ ----------- ---------- ---------------- ----------------
DEBT SECURITIES
Principal
Issuer Amount Date of Note Maturity Date
- ------ --------- ------------ -------------
INTELLECTUAL PROPERTY
I. Copyrights
Registration Expiration
Registered Owner Title Number Date
- ---------------- ----- ------------ ----------
II. Copyright Applications
Registration Date
Registered Owner Title Number Filed
- ---------------- ----- ------------ -----
III. Copyright Licenses
Registration Expiration
Licensee Licensor Title Number Date
- -------- -------- ----- ------------ ----------
IV. Patents
Registration Expiration
Registered Owner Mark Number Date
- ---------------- ---- ------------ ----------
V. Patent Applications
Registration Date
Registered Owner Mark Number Filed
- ---------------- ---- ------------ -----
VI. Patent Licenses
Registration Expiration
Licensee Licensor Mark Number Date
- -------- -------- ---- ------------ ----------
VII. Trademarks
Registration Expiration
Registered Owner Type Number Date
- ---------------- ---- ------------ ----------
-2-
VIII. Trademark Applications
Registration Date
Registered Owner Type Number Filed
- ---------------- ---- ------------ -----
IX. Trademark Licenses
Registration Expiration
Licensee Licensor Type Number Date
- -------- -------- ---- ------------ ----------
-3-